A franchise is when one company (the franchisor) lets another person or company (the franchisee) use their name, products, and brand for a fee. In Ghana, there are rules that control how franchises run. These rules make sure franchises follow the law and protect both the franchisor and the franchisee.
Below are the top 10 legal requirements for establishing and operating a franchise in Ghana:
- Registration of Business
Every franchise, whether foreign or local, must register with the Office of the Registrar of Companies (ORC) in order to legally operate in Ghana. The franchisee and franchisor must comply with the Companies Act, 2019 (Act 992) regarding setting up their businesses/companies.
- Ghana Investment Promotion Center (GIPC) Registration
Foreign franchisors must register with the Ghana Investment Promotion Center (GIPC) in order to ensure compliance with foreign investment regulations, including the requirements for minimum capital investment.
- Franchise Agreement
The agreement between the franchisor and franchisee must clearly state the rights, obligations, and responsibilities of both parties. It must comply with contract laws in Ghana and include terms relating to fees, royalties, branding, and termination.
- Intellectual Property Protection
Franchisors must protect their trademarks, patents, and other intellectual properties under Ghanaian law. They may register their trademarks with the ORC in order to secure exclusive rights over brand elements.
- Taxation Requirements
Franchisors and franchisees are required to pay taxes under Ghana’s tax laws. This includes Value Added Tax (VAT), corporate tax, and other applicable duties. Franchisors may also be required to pay withholding tax on royalties earned from their franchisees.
- Compliance with Consumer Protection Laws
Franchise businesses must obey the provisions outlining consumer rights and product standards within Ghana’s Consumer Protection Act. They must provide quality goods and services that meet the country’s regulations.
- Compliance with Labour Laws
Franchise businesses must adhere to labor laws, including those stated in the Labour Act, 2003 (Act 651). These laws set out employment conditions, working hours, and employee welfare. They also apply to the hiring process, payment of wages and employment contracts.
- Foreign Exchange Regulations
If the franchisor is a foreign entity, any transfer of funds (royalties, fees) outside Ghana must comply with the Foreign Exchange Act, 2006 (Act 723). The Bank of Ghana’s approval may be required for certain financial transactions.
- Sector-Specific Regulations
There may be sector-specific regulations a franchise must adhere to depending on its industry. For example, franchises in the food industry must comply with the regulations set by the Ghana Food and Drugs Authority (FDA).
- Environmental and Health Compliance
Franchisees, especially those in sectors such as food and retail, must comply with environmental and public health regulations. This may include obtaining health and safety permits from the Environmental Protection Agency (EPA).
Starting a franchise in Ghana requires following key legal steps to ensure everything runs smoothly and within the law. By understanding and following these requirements, franchises can thrive while protecting the interests of all parties involved.
Philipa N. A. Sima Nuamah on behalf of OSD and Partners. [email protected]
